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Typically, when a company misses on either trailing results or forward guidance in an earnings report, it's punished by the market. It's also frequently dinged by analysts.
Sure enough, over the past few days, both groups rapped the knuckles of adtech company Perion Network (NASDAQ: PERI) following the release of its latest set of quarterly earnings. According to data compiled by S&P Global Market Intelligence, the stock tumbled nearly 13% in price this week.
Well short with top-line guidance
Hump Day was the day Perion failed to surmount, as that's when it unveiled its fourth-quarter and full-year 2024 fundamentals. Although total sales in the former period were down by almost 45% year over year, they landed only slightly below analyst projections at $129.6 million.
Of the company's two revenue components, search advertising suffered the steeper decline. It fell by 78% to $25.5 million, while advertising solutions declined by 13% to slightly over $104 million.
Further down the profit and loss statement, Perion's non-GAAP (adjusted) net income also recorded quite a steep drop. It plummeted by 70% to a bit more than $16 million, or $0.33 per share. Despite the tanking, that line item beat the consensus pundit estimate.
More of a problem was management's full-year 2025 revenue guidance. Perion expects to collect $400 million to $420 million on the top line. However, those analysts collectively are modeling nearly $469 million.
A challenging environment
On the afternoon of Perion's earnings release, Lake Street Capital Markets pundit Eric Martinuzzi cut his price target on the stock. He now feels it's worth $10.50 per share (down from his previous $11), although he maintained his buy recommendation.
In this rapidly evolving media environment, it's difficult for ad-dependent companies to post consistent growth. That said, Perion's steep falls in the recent past are concerning, and management will have its work cut out to convince investors it can move the numbers in a positive direction soon.
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